U.S. Base Oil Price Report


While participants appeared to enjoy the current stable conditions of the base oils market, suppliers were starting to feel slightly disappointed at the relative lack of action.

The first quarter of the year was punctuated by a number of price increase initiatives, which appeared rather complex due to the disparities in amounts and implementation dates among the different producers. Buyers and sellers alike lamented that it had been difficult to follow and understand all the base oil price adjustments, which also triggered hikes in the finished lubricants and additives segments.

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During the same period, relatively steady demand was reported in most base oil tiers, with the API Group I sector showing a tightening supply and demand balance, and the Group II and III segments seeing fairly healthy conditions.

However, in years past, requirements typically started to mount towards the end of February or early March, in preparation for the spring production cycle, and ahead of the hurricane season running from June to November, when many participants pad inventories in case of supply disruptions. This did not appear to be the case this year, as requirements were lagging.

Most sources agreed that the start of the season had been delayed due to external factors such as cool temperatures in many areas of the United States, uncertainties in terms of the governments trade policies, stock market swings, and crude oil volatility.

Suppliers still hoped that a spring uptick materialized, but it may not be as strong as last year–and it should have started a month ago, a source commented.

Meanwhile, buying interest from Mexico and South America for U.S. Group I base oils remained robust, keeping this segment of the market tight as spot barrels were scant.

Domestic supply of Group I grades should improve with the restart of the HollyFrontier Group I plant in Tulsa, Oklahoma, in the next few days. The turnaround at this plant appeared to have been extended by a week from its original date.

There has been some confusion regarding the turnaround schedule at the Petro-Canada plant in Mississauga, Canada, which had been reported as being off-line for maintenance last month. It now appears that the turnaround, which was expected to last 40 days, had been delayed and the plant was taken off line more recently. The unit can produce 11,660 b/d Group II and 4,000 b/d Group III base oils.

Details about these turnarounds were not available from the producers directly.

Activity on the naphthenic side was described as steady, with no production issues noted and demand deemed adequate for this time of the year. There were rumblings about price pressure coming from the crude oil side, as prices have strengthened, but no specifics were forthcoming by press time.

Upstream, crude oil futures climbed on Tuesday, extending the previous days steep gains, as geopolitical tensions eased. Chinas President Xi Jinping vowed to continue opening the Chinese economy, signaling that the threat of a trade war between China and the United States had eased.

Brent oil futures settled at their highest in more than three years on the ICE Futures Europe on Tuesday as tensions linked to Syria fed concerns about potential disruptions to Middle East crude output.

On Tuesday, April 3, West Texas Intermediate futures settled at $65.51 per barrel on the CME/Nymex, up $2/bbl from $63.51/bbl on April 3.

Light Louisiana Sweet crude wholesale spot prices settled at $66.45 per barrel on April 9, compared to $65.75/bbl on April 2, according to the U.S. Energy Information Administration.

Brent was trading at $71.04/bbl on the CME on April 10, up $2.92/bbl from $68.12/bbl on April 3.

Low sulfur vacuum gas oil was at May WTI plus $12.50/bbl ($75.92/bbl) and high sulfur VGO was at crude plus $10.50/bbl ($73.92/bbl) on April 9. By comparison, low sulfur VGO was hovering at $75.76/bbl and high sulfur VGO at $74.01/bbl) on April 2, according to data published by PetroChemWire.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

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Base Oil Pricing Report    Base Stocks    Other